Although Spain’s difficult economy has proved troublesome for many companies operating there, Orange’s Spanish fortunes continue to grow. With 14 million customers, Orange has again outperformed the Spanish market to establish itself as the #2 mobile and fixed telco in the Spain. This now puts Orange just ahead of Vodafone (whose Enterprise business Orange has its sights on next), but still lagging Spanish leader Telefonica. who they lag in mobile by approximately 6 million subscribers.
While Spain has been a rising star for Orange and now accounts for 4 billion of their p.a. revenues, it still remains the second most important international market for the French telco operator behind Poland. However, as the company doesn’t see Spain’s impressive growth abating anytime soon, it fully expects Spain to ultimately overtake Poland.
Adapting to a changing market
Given the tough economic climate, Orange smartly focused on the more affordable SIM-only mobile offer in the Spanish market (ie no subsidized handset included). While this type of offer accounts for just over 50% of Orange’s mobile revenue in France, it makes up 90% of its sales in Spain. Interestingly, two-years ago Orange didn’t even offer these types of ‘contracts’. However, the entry of Free precipitated a big shift in Orange’s strategy in France towards lower cost offers which they’ve managed to successfully extend into other markets.
In a recent meeting with Orange employees in Madrid, Orange’s CEO Stephane Richard expressed his excitement about the strong performance in Spain and sought to reassure staff there that Orange’s future prospects in Spain continue to look bright. However, he continued to stress that while Orange would continue to look at expansion in Europe via moves such as a potential ‘merger of equals’ with Deutsche Telekom (reportedly a real possibility due to looming competitive threats such as the potential entry of AT&T in Europe), cost and debt-reduction will continue to be a priority for the company.